Question

You manage a cable company that offers 2 channels - NBC and Fox. You face 2 types of customers (type A and type B) and there are 100 customers of each type. Their respective values for each channel are:

Type A Type B
NBC $10 $15
Fox $3 $7

Suppose that you sell each channel separately. You should set a price of $__________ for NBC and a price of $_________ for Fox.

Answer 1

You should set a price of $___15_____ for NBC and a price of $___7___ for Fox.

Step-by-step explanation:

a) Data and Calculations:

Customer Type A Type B Maximum Price

NBC $10 $15 $15

Fox $3 $7 $7

Combined value $13 $22

b) The cost of each channel would have enabled a better decision outcome to be reached. However, it is better to set the maximum prices since individual values can change based on the forces of demand and supply.